Crest View International, a Hong Kong based wealth management company reported that China is faced with growing numbers of bad loans, China's biggest banks are ramping up efforts to get rid of them.

Crest View International analysts and researchers saw that China's major banks last year wrote or spun off more than twice what they did in 2013 to keep the fallout from a slowdown in China's economy from lingering on their balance sheets. As a result, the biggest continued to report nonperforming loan ratios close to 1%, an enviable level in the banking world.

But the write-offs show the problems facing China's financial system. The world's No. 2 economy posted its slowest growth in more than two decades last year, and many local government and big state-owned companies are still grappling with the hangover from China's post-2008 lending binge. A further slowdown could hit the lenders even harder this year, as they face letting bad loans rise or pursuing more write-offs that would further crimp profit growth.

On Friday, China Construction Bank Corp. the last of China's major banks to publish results, said it earned 227.83 billion yuan ($37 billion) in net profit last year, up 6.1% from 214.66 billion yuan in 2013.

“It wrote off 35.66 billion yuan worth of loans last year, more than double the 16.7 billion yuan in 2013.” Commented James Turner, Director of Sales & Trading at Crest View International.

In 2014, China's four biggest banks Bank of China Ltd., Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd wrote off and transferred out 128.98 billion yuan in loans last year. Crest View International said to its clients in a report “That marks a surge from 2013, when they wrote off 52.11 billion yuan”.

“In the late 1990s, the banks let bad loans pile up on their balance sheets until they threatened to clog the flow of credit. China's banks since have been setting aside large provisions against bad debt. Still, banks say that they expect their nonperforming loan levels to continue to rise, particularly if the economy slows further.” Commented Nathan Hu, Head of Research at Crest View International.

Since China's last bad-loan crisis the banks have become better at working through nonperforming loans themselves through restructuring debt and reclaiming collateral. Still, the four bad banks have stepped up their acquisition of bad loans from commercial banks in recent years, and have been joined by newly formed bad banks set up by the provinces.

ICBC said that it intends to keep its nonperforming loans ratio below 1.45% at the end of this year. It was at 1.13% at the end of 2014.